Experts Want SWF Incorporated into Budget

12 Dec 2012

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Ngozi Okonjo Iweala, Finance Minister

Ndubuisi Francis
Experts that converged in Abuja Tuesday  to x-ray the nation’s economic indices canvassed the integration of the Sovereign Wealth Fund (SWF) into the annual budget as well as an aggressive diversification of the economy with non-oil export as the fulcrum.

The forum was the fourth Economic Policy and Fiscal Strategy seminar organised by the Centre for the Study of the Economies of Africa (CSEA).

Experts at the event included the Director of the Centre for International Development, Havard, University, Prof. Richardo Hausmann; Executive Director of CSEA, Dr. Ebere Uneze; Resident Representative of the International Monetary Fund (IMF), Mr. Scott Rogers, and the Director of Research, Central Bank of Nigeria (CBN), Dr. Charles Mordi, among others.

In his keynote address, which dwelt on “Product Space and Export Competitiveness,” Hausmann, argued that countries with bigger oil output/export were still far ahead of Nigeria in non-oil export, citing Norway , Mexico , Saudi Arabia , and Venezuela , among others.

He expressed regret that in spite of the huge potential in non-oil sectors, particularly agriculture, Nigeria had not developed the required capabilities for export.

Hausmann, who stated that Nigeria ranks as the sixth worst country in the world vis-à-vis product export space, argued that the country cannot record real economic growth without an aggressive growth in non-oil export.

In his opening address, the CSEA Director, Ebere Uneze, noted that while real gross domestic product (GDP) has grown to over six per cent in over the years, the economy cannot be said to be competitive when compared with other emerging economies.

He observed, for instance, that Nigeria has for some time now been sliding in key indices such as the ‘Ease of Doing Business Index’.

Uneze stated that a situation where the top 100 non-oil exporters in Nigeria earned about $1.8 billion in the whole of 2010, which is less than one month oil revenue, was a confirmation of the lack of competitiveness of the economy.

A former Country Representative of the IMF now with CSEA, Dr. Menachem Katz, who also presented a paper on the “Role of Fiscal Policy in Promoting Growth”, noted that oil and gas revenue constituted 75 per cent of the nation’s total revenue, adding that the Federal Government has little or no oversight over half of these receipts which are allocated to the states and local governments.

He noted that while the federal Government may exercise prudence, it has limited say on fiscal stance of the states and local governments.

According to him, while data exists on the federal government budget, that was not the case with the other tiers of government.

Katz, who also spoke on the SWF, stated that the Fiscal Responsibility Act (FRA) was being strengthened by the SWF or Nigerian Sovereign Investment Authority (NSIA).

He noted that the NSIA does not specify the mechanism to be applied in determining how much revenue to be allocated to the SWF nor does the country specify how fund is consolidated with budget. He therefore advocated the incorporation of the SWF into the annual budget.

Caption: Chairman of the Asset Management Corporation of Nigeria (AMCON), Alhaji Kola Belgore

‘AMCON’s Intervention Saved Financial Sector from Collapse’
Obinna Chima
The Chairman of the Asset Management Corporation of Nigeria (AMCON), Alhaji Kola Belgore Tuesday  said that the injection of over N5 trillion into the financial system saved the sector as well as the economy from collapse.

Belgore said this at the maiden edition of the Chartered Institute of Stockbroker (CIS) workshop held in Abuja.

He however noted that the bulk of the funds were used in purchasing the non performing loans (NPLs) in former rescued banks.
"Virtually all NPLs in the books of the banks have been mopped up by AMCON," he enthused.

He further revealed that other sectors of the economy which include power, telecoms, agriculture oil and gas among others had felt the impact of the corporation.

He however commended the announcement of a bailout package for the capital, which he described as a major milestone. He argued that the decision to intervene in the capital market was strategic, saying that it would ensure that every aspects of the economy grow.

"One major sector outstanding in AMCON's intervention is the capital market. If all sectors are cleaned up and the capital market is left out, the problem in the economy will persist.

"Though we (AMCON) is owned 50 per cent each by the Central Bank of Nigeria (CBN) and the Federal Ministry of Finance, AMCON paid off the margin loan owed by the capital market to the banks", he emphasised.   

He added: "Today, the margin loan saga is behind us. It is completely written off. Now, the capital market is alive, because all bailed out companies may soon begin find their ways back to the market to list their shares."

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